Hilton to spin off real estate, timeshare businesses

Published 7:42 AM ET Fri, 26 Feb 2016
Reuters

Waldorf Astoria hotels owner Hilton Worldwide Holdings will spin off most of its real estate assets into a real estate investment trust, joining a list of companies turning to the tax-efficient structure to maximize shareholder returns.

In the past year, companies including casino operator MGM Resorts International and restaurants owner Darden Restaurant have announced REITs, which distribute 90 percent of their taxable income to shareholders.

Hilton, which is also spinning off its timeshare business into a separate publicly traded company, said on Friday that the REIT would own about 70 hotel properties with 35,000 rooms.

William Thomas Cain | Getty Images

The company's shares rose 8 percent in light premarket trading.

Hilton owned or leased 144 hotel properties around the world at the end of 2014. Analysts estimate that the properties are worth more than $10 billion.

"We think this (the spinoffs) makes sense by simplifying the businesses and should result in a higher net valuation multiple," J.P.Morgan analyst Joseph Greff wrote in a note.

The hotel operator expects to complete the spinoffs of both its real estate assets and its timeshare business, Hilton Grand Vacations, by the end of the year.